Sangeet Resorts , Amabala Cantt. V. DCIT, Circle, Ambala

ITA 561/CHANDI/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6064 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 25-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KULTEJ SINGH BAINS CIT DR
• Keywords: Depreciation; Deemed to accrue or arise in india; Tax effect
• Section: 143(3); 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B CHANDIGARH . . , , BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO. 561/CHD/2019 / ASSESSMENT YEAR : 2014-15 M/S SANGEET RESORTS, C/O RAJIV GOEL & ASSOCIATES, 179, BANK ROAD, AMBALA CANTT. ! THE DCIT, CIRCLE, AMBALA ' # ./PAN NO: AFSFS7209L '$/ APPELLANT &' '$ /RESPONDENT ()*+ /ASSESSEE BY : SHRI ROHIT GOEL, CA *+ / REVENUE BY : SHRI KULTEJ SINGH BAINS, ADDL. CIT DR , -*) .# /DATE OF HEARING : 08.01.2020 /0 *) .# / DATE OF PRONOUNCEMENT : 29.01. 2020 / ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 11.03.2019 OF THE COMMISSIONER OF INCOM E TAX (APPEALS)-1, PANCHKULA [HEREINAFTER REFERRED TO AS CIT (A)]. 2. THE ASSESSEE IN THIS APPEAL HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTIONS OF THE DCIT IN ASSESSING THE AMOUNT OF RS. 2,00,00,000/- AS DEEMED INCOME U/S 69 OF THE ACT. ITA NO. 561-CHD-2019 M/S SANGEET RESORTS, AMBALA CANTT. 2 2. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTIONS OF THE DCIT IN NOT ALLOWING SET OFF OF CURRENT YEAR DEPRECIATION AND CURRENT YEAR BUSINESS LOSSES AMOUNTING RS. 65,54,780/- FROM THE ADDITIONAL INCOME OF RS. 2,00,00,000/-. 3. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTIONS OF THE DCIT IN NOT COMPLETING THE ASSESSMENT AS PER THE PROVISIONS OF SEC 115BBE AS APPLICABLE TO AY 2014-15. (TAX EFFECT = RS. 22,27,969/-) 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEN D OR TO SUBSTITUTE THE ABOVE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF CASE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY BEING A SURVEY CASE. DURING T HE COURSE OF THE SURVEY, THE ASSESSEE HAD SURRENDERED AN ADDITIONAL INCOME OF RS. 2,00,00,000/- (RS.9,20,000/- ON ACCOUNT OF DIFFEREN CE IN CASH IN HAND, RS. 1,00,30,000/- ON ACCOUNT OF UNACCOUNTED INVESTM ENT IN BUILDING & RS.90,50,000/- ON ACCOUNT OF UNACCOUNTED AMOUNTS RE CEIVABLE). IN THE RETURN OF INCOME FILED, THE ASSESSEE CLAIMED SETTIN G OFF OF THE DEPRECIATION OF RS.52,36,004/- AND BUSINESS LOSS OF RS. 13,24,781/- AGAINST THE ADDITIONAL INCOME DECLARED. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HELD T HAT DEPRECIATION AND OTHER EXPENSES COULD NOT BE CLAIMED AGAINST THE ADD ITIONAL INCOME DECLARED DURING THE SURVEY PROCEEDINGS, BY PLACING RELIANCE ON THE ITA NO. 561-CHD-2019 M/S SANGEET RESORTS, AMBALA CANTT. 3 JUDICIAL PRONOUNCEMENT OF THE HON'BLE PUNJAB & HARY ANA HIGH COURT IN THE CASE OF M/S KIM PHARMA (P) LTD. IN ITA NO. 106 OF 2011 DATED: 27.04.2011. THE ASSESSING OFFICER, THEREFORE DISALL OWED THE DEPRECIATION AND BUSINESS LOSS CLAIMED BY THE ASSES SEE AND COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT AN INCOME OF R S.2,00,00,000/- VIDE ORDER DATED 30.12.2016. 3. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSE SSING OFFICER IN NOT ALLOWING THE SET OFF OF CURRENT YEAR BUSINESS L OSS FROM THE ADDITIONAL INCOME HOLDING THAT THE AMENDMENT BROUGHT TO SECTIO N 115BBE OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') W.E.F. 1 .4.2017 WAS CLARIFICATORY IN NATURE AND, HENCE, APPLICABLE RETR OSPECTIVELY. 4. HOWEVER, BEFORE US, LD. COUNSEL FOR THE ASSESSE E RELIED UPON THE CIRCULAR NO. 11 OF 2019 OF THE CBDT, WHICH READS AS UNDER:- CIRCULAR NO. 11/2019 GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES NORTH-BLOCK, NEW DELHI, DATED THE 19 TH OF JUNE, 2019 SUBJECT: CLARIFICATION REGARDING NON-ALLOWABILITY O F SET-OFF OF LOSSES AGAINST THE DEEMED INCOME UNDER SECTION 115BBE OF T HE INCOME-TAX ACT, 1961 PRIOR TO ASSESSMENT-YEAR 2017-18-REG. WITH EFFECT FROM 01.04.2017, SUB-SECTION (2) OF SEC TION 115BBE OF THE INCOME-TAX ACT, 1961 (ACT) PROVIDES THAT WHERE TOTAL INCOME OF AN ASSESSEE INCLUDES ANY INCOME REFERRED TO IN SECTION (S) 68/69/69A/69B/69C/69D OF THE ACT, NO DEDUCTION IN R ESPECT OF ANY EXPENDITURE OR ALLOWANCE OR SET OFF OF ANY LOSS SHA LL BE ALLOWED TO THE ITA NO. 561-CHD-2019 M/S SANGEET RESORTS, AMBALA CANTT. 4 ASSESSEE UNDER ANY PROVISIONS OF THE ACT IN COMPUTI NG THE INCOME REFERRED TO IN SECTION 115BBE(1) OF THE ACT. 2. IN THIS REGARD, IT HAS BEEN BROUGHT TO THE NOTICE OF THE CENTRAL BOARD OF DIRECT TAXES(THE BOARD) THAT IN ASSESSMENTS PRIO R TO ASSESSMENT YEAR 2017-18, WHILE SOME OF THE ASSESSING OFFICERS HAVE ALLOWED SET OFF OF LOSSES AGAINST THE ADDITIONS MADE BY THEM UNDER SECTION(S) 68/69/69A/69B/69C/69D, IN SOME CASES, SET OFF OF LO SSES AGAINST THE ADDITIONS MADE UNDER SECTION 115BBE(1) OF THE ACT H AVE NOT BEEN ALLOWED. AS THE AMENDMENT INSERTING THE WORDS 'OR SET OFF OF ANY LOSS' IS APPLICABLE WITH EFFECT FROM 1 ST OF APRIL, 2017 AND APPLIES FROM ASSESSMENT YEAR 20 17-18 ONWARDS, CONFLICTING VIEWS HAVE BEEN TAKEN BY THE A SSESSING OFFICERS IN ASSESSMENTS FOR YEARS PRIOR TO ASSESSMENT YEAR 2017 -18. THE MATTER HAS BEEN REFERRED TO THE BOARD SO THAT A CONSISTENT APPROACH IS ADOPTED BY THE ASSESSING OFFICERS WHILE APPLYING PROVISION OF SECTION 115BBE IN ASSESSMENTS FOR PERIOD PRIOR TO THE ASSESSMENT YEAR 2017-18. 3. THE BOARD HAS EXAMINED THE MATTER. THE CIRCULAR NO . 3/2017 OF THE BOARD DATED 20 TH JANUARY, 2017 WHICH CONTAINS EXPLANATORY NOTES TO T HE PROVISIONS OF THE FINANCE ACT, 2016, AT PARA 46.2, REGARDING AMENDMENT MADE IN SECTION 115BBE(2) OF THE ACT MENTIONS THAT CURRENTLY THERE IS UNCERTAINTY ON THE ISSUE OF SET-OFF OF LOSSES AGAIN ST INCOME REFERRED TO IN SECTION 115BBE. IT ALSO FURTHER MENTIONS THAT THE P RE-AMENDED PROVISION OF SECTION 115BBE OF THE ACT DID NOT CONVEY THE INTENT ION THAT LOSSES SHALL NOT BE ALLOWED TO BE SET-OFF AGAINST INCOME REFERRED TO IN SECTION 115BBE OF THE ACT AND HENCE, THE AMENDMENT WAS MADE VIDE THE FINANCE ACT, 2016. 4. THUS KEEPING THE LEGISLATIVE INTENT BEHIND AMENDME NT IN SECTION 115BBE(2) VIDE THE FINANCE ACT, 2016 TO REMOVE ANY AMBIGUITY OF INTERPRETATION, THE BOARD IS OF THE VIEW THAT SINCE THE TERM 'OR SET OFF OF ANY LOSS' WAS SPECIFICALLY INSERTED ONLY VIDE THE FINAN CE ACT 2016, W.E.F. 01.04.2017, AN ASSESSEE IS ENTITLED TO CLAIM SET-OFF OF LOSS AGAINST INCOME DETERMINED UNDER SECTION 115BBE OF T HE ACT TILL THE ASSESSMENT YEAR 2016-17. 5. THE CONTENTS OF THIS CIRCULAR MAY BE CIRCULATED WI DELY FOR INFORMATION OF ALL STAKEHOLDERS AND DEPARTMENTAL OFFICERS. THE PEN DING ASSESSMENTS AND LITIGATIONS ON THIS ISSUE MAY BE HANDLED ACCORDINGL Y. 6. HINDI VERSION TO FOLLOW. SD/- UNDER SECRETARY (ITA.II), CBDT RAJARAJESWAWR.) ITA NO. 561-CHD-2019 M/S SANGEET RESORTS, AMBALA CANTT. 5 5. A PERUSAL OF THE ABOVE CIRCULAR REVEALS THAT THE CBDT NOW HAS CLARIFIED THE MATTER THAT THE ASSESSEE WILL BE ENTI TLED TO SET OFF OF LOSS AGAINST INCOME DETERMINE U/S 115BBE OF THE ACT TILL ASSESSMENT YEAR 2016-17. THE ASSESSMENT YEAR UNDER CONSIDERATION BEING ASSESSMENT YEAR 2014-15, THE ASSESSEE IS ACCORDINGLY ENTITLED TO THE SET OFF OF THE CURRENT YEAR LOSSES AGAINST THE DEEMED INCOME. THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.01.2020. SD/- SD/- ( . . / N.K. SAINI) ( ! ' / SANJAY GARG) #$% / VICE PRESIDENT &' / JUDICIAL MEMBER DATED : 29.01.2020 .. 2*&)3454) / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. &' '$ / THE RESPONDENT 3. , 6) / CIT 4. , 6) ( )/ THE CIT(A) 5. 47 &)8 , . 8 , 9:;< / DR, ITAT, CHANDIGARH 6. ;= - / GUARD FILE